Yang Ming expects boost on fall in oil price, more trade

TALKING MONEY:Yang Ming posted NT$27.46 billion in consolidated revenue in the first quarter, 4.23 percent more than a year earlier

By Amy Su / Staff reporter

Yang Ming Marine Transport Corp (陽明海運), the Taiwan’s second-largest container shipper by fleet size, yesterday said that it expects its profitability to improve this year on the back of increasing global trading volumes and falling international crude oil prices.

The company also expects the first quarter to be the low-point for its business this year, Yang Ming chairman Frank Lu (盧峰海) said.

“We hope to make progress in terms of profitability this year from last year,” Lu told a media briefing, expressing optimism about both US and Asian routes this year.

Yang Ming’s net profit for last year was NT$51.44 million (US$1.72 million), or NT$0.02 per share, compared with losses of NT$9.4 billion, or NT$3.33 per share, a year earlier, company data showed.

Lu maintained a more optimistic view on routes to the US this year, as major global container shippers have been more insistent on raising freight rates, while business on Asian routes may maintain its moderate pace of growth.

However, sentiment on European routes — which account for about 28 percent of the company’s transportation volume — remains relative bearish, he said.

Lu said most shipping industry experts have predicted lower prices for global crude oil this year on the back of rising supply from Russia and increasing development of liquefied natural gas (LNG) sources.

The company forecast that Brent oil prices would be between US$90 and US$100 per barrel this year, with bunker fuel prices set to drop to between US$620 and US$630, from US$670 per tonne last year.

According to company statistics, an average decrease of US$10 per tonne in the price of bunker fuel helps Yang Ming save NT$500 million.

Fuel costs account for 24 percent to 28 percent of the company’s total costs.

Supply and demand conditions in the container shipping sector are steadily improving, with a better balance expected in 2015, Lu said.

The company plans to lease up to 10 new 14,000 twenty-foot equivalent units (TEU) container ships, which are set to be delivered from 2015, to replace 15 older vessels.

Lu said this would not increase the company’s capacity.

Last year, Yang Ming announced it had secured up to 10 new vessels in a leaseback agreement with Seaspan Corp, an independent owner and manager of container vessels listed in the US, in a bid to boost energy efficiency.

Yang Ming, which was established in 1972, posted NT$27.46 billion in consolidated revenue in the first quarter of this year.

That was an increase of 4.23 percent from a year earlier, the company said in a stock exchange filing.

Additional reporting by staff writer

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